Update - tender offer

Acorn Income Fund Ld
29 September 2006


                           Acorn Income Fund Limited
                                (the 'Company')

                                     Update


At the Company's Annual General Meeting earlier this year, the special
resolution proposed at that meeting, that the Company ceases as an investment
company, was not carried by the necessary 75 per cent. majority of votes cast.
Notwithstanding this and in accordance with its earlier undertakings, the Board
announced that it would put forward proposals to Shareholders which would
provide the opportunity for Shareholders wishing to realise or reduce their
investment in the Company to do so at close to net asset value.


The Board together with its advisers has received and reviewed a number of
proposals and has consulted widely with Shareholders.  During that process it
has become apparent that a significant number of Shareholders would like to
continue their investment in the Company.


In light of this, the Board, having been independently advised by Fairfax I.S.
Limited, is in the process of finalising the following proposals which will be
subject to Shareholder approval.


Tender Offer


The Company will make a tender offer to repurchase up to all of its Ordinary
Shares at net asset value which will be calculated after taking account of all
costs (including portfolio realisation costs) incurred in relation to the
proposals and otherwise in accordance with the Company's normal accounting
policies.  This will allow all of those Shareholders who want to realise their
investment to do so.  Provided that the Company is of sufficient size following
the Tender Offer, it is proposed for it to continue with the same investment
policy and objective.


Change of Manager


The Company has today served protective notice on Collins Stewart Fund
Management Limited ('CS') in relation to the termination of their Management
Agreement with the Company.


Following completion of the Tender Offer, it is proposed that Premier Asset
Management (Guernsey) Limited ('Premier') will be appointed as the Company's
managers in place of CS.  The small companies portfolio will continue to have
Unicorn Asset Management Limited ('Unicorn') as its Investment Adviser.


Having carefully considered the various alternative proposals submitted to it,
the Board preferred the proposal put forward by Premier and Unicorn in the
belief that it best reflected the views of the substantial majority of those
Shareholders who wanted to continue their investment in the Company.


The principal terms of the proposal from Premier are that the management fee
would be 0.7 per cent. per annum of gross assets together with a performance fee
of 15 per cent. over a total return of 10 per cent. per annum.  Premier have
also agreed to cap the total expense ratio of the Company at 1.5 per cent. of
gross assets excluding performance fees and non-routine administration and
professional fees.


Further details on these proposals will be provided to Shareholders in due
course.  It is the Board's intention that these proposals should be implemented
as soon as possible and, subject to regulatory consents, hopes to be in a
position to post documents to Shareholders by 17 November 2006.


Enquiries:

Paul Richards

Fairfax I.S. Limited

020 7598 5368


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